1. A manufacturer estimates its factory overhead costs to be $30,000 and machine

Question

1. A manufacturer estimates its factory overhead costs to be $30,000 and machine hours to be 4,000 for the year. If the actual hours worked on production total 3,800 and the actual factory overhead costs are $28,000, what is the amount of the over- or underapplied factory overhead?

A) $500 overapplied

B) $500 underapplied

C) $2,000 overapplied

D) $2,000 underapplied

2. Sessler Manufacturers made two announcements concerning its common stock today. First, the company announced that the next annual dividend will be $1.75 a share. Secondly, all dividends after that will decrease by 1.5 percent annually. What is the maximum amount you should pay to purchase a share of this stock today if you require a 14 percent rate of return?

A) $11.29

B) $12.64

C) $13.27

D) $14.00

E) $14.21

Explanation / Answer

1 Predetermined overhead rate = 30000/4000 = $7.5 Overhead applied = 3800*7.5= 28500 Overapplied factory overhead = 28500-28000 = 500 Option B is correct 2 Maximum amount = 1.75/(0.14-(-0.015))= 11.29 Option A is correct

Related Questions

Navigate

• Browse (All)
• Browse 1
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.